Singapore Exchange (“SGX”), together with the Association of Banks in Singapore (ABS), the Institute of Singapore Chartered Accountants (ISCA), the Law Society of Singapore and the Singapore Institute of Directors (SID), is launching a guide on the prevention of insider trading.
The guide contains recommended principles and guidelines to help companies and their advisers in retaining control over the flow of confidential information, appropriately restricting staff dealing in the company’s securities and creating a culture of compliance.
Specifically, this guide has suggestions on arrangements that companies and their advisors can put in place to more effectively deter insider trading. Areas covered by the guide include:
- arrangements for ensuring that confidential information generated and/or received remains confidential until it is reasonably expected to be disclosed under the relevant laws, regulations and the Listing Rules;
- how to minimise the risks of accidental leakage of confidential information;
- characteristics of effective trading restrictions on dealings in securities; and
- how to promote strong awareness of the importance of appropriate handling and control of confidential information.
Examples are included to illustrate how the principles and guidelines can be put into practice. The guide is not meant to be prescriptive or exhaustive, and needs to be customised to each company’s unique profile and circumstances.
“Insider trading is hard to detect and prosecute as the leakage of inside information occurs covertly in private, off the exchange; the preemptive approach is we believe, the best way to deal with this risk. Our partnership with industry participants on this guide is similar to how we worked with member firms on the Trade Surveillance Handbook and Members’ Surveillance Dashboard. We look forward to more collaborative efforts with the whole eco-system to take the fight against market misconduct further upstream,” said Tan Boon Gin, CEO of Singapore Exchange Regulation (SGX RegCo).
“This guide will be invaluable in ensuring best practice standards as our members go about their advisory and financing work with their clients and other industry professionals. ABS is always supportive of higher standards as they ensure a strong and sustainable positioning for Singapore as an international financial centre,” said Mrs Ong-Ang Ai Boon, Director of ABS.
“We are pleased to have contributed to the guide to prevent insider trading. As the national accountancy body in Singapore, we recognise the importance of having guidelines in upholding high corporate governance standards. This enhances trust among stakeholders of the organisation, including the staff members. The guide outlines principles for issuers and advisers in creating a culture of compliance. It also provides guidelines on the handling of confidential information. By recognising and minimising the risk of accidental information leaks or misuse of confidential information, business leaders are better equipped to safeguard the interests of organisations and ensure their organisations meet statutory obligations,” said Mr Lee Fook Chiew, Chief Executive Officer of the Institute of Singapore Chartered Accountants.
“We are heartened by the collaborative approach taken to compile the guide. This guide is not only for corporates. We believe legal professionals who handle confidential material information and who advise clients on such information will find the recommendations and examples useful,” said Mr Adrian Chan, Chairman of the Corporate Practice Committee of the Law Society of Singapore.
“Insider trading can be a minefield. We hope this guide will clarify the grey zones and help companies and individuals avoid the mines, or minefield entirely,” said Ms Joyce Koh, Executive Director, Singapore Institute of Directors.